Good News All Around In January Jobs Report

Since August, the unemployment rate has dropped from 9.1% to, as of the last report in January, 8.5%. Good news, without question, although incomplete given the fact that several of those monthly drops occurred because the labor force participation rate fell as people dropped out of looking for work. Additionally, the monthly jobs reports weren’t really great news since the net jobs numbers was far below where it needs to be in order for the jobs market to really recover. You can’t say that this month, though, because the January jobs report is good news all around, and the best jobs report we’ve seen in more than three years:

The pace of job creation surged in January, with the US economy generating 243,000 new positions while the unemployment rate dropped to 8.3 percent, according to government data released Friday.

Both numbers were far better than consensus, which expected a growth of 150,000 jobs and a steady unemployment rate of 8.5 percent.

Stock market futures jumped on the report, indicating a positive opening on Wall Street. Treasury yields also moved sharply higher on the news.

The overall work week remained unchanged at 34.5 hours while wages rose an average of four cents an hour to $23.29.

Job gains have been concentrated primarily in the service sector, particularly in retail and the food and beverage industries. Warehousing, manufacturing, mining and health care also have participated.

True to form, services were responsible for 162,000 of the January swell, with manufacturing payrolls growing 50,000. Government cuts subtracted 14,000 from the total.

The total number of unemployed fell below 13 million for the first time since February 2009, while the total amount of employed Americans rose to 141.6 million, an increase of 847,000 from December.

The unemployment rate was last this low in February 2009 as well.

The BLS also revised previous month’s jobs reports upward. December’s number was revised upward slightly to 203,000 (a net increase of 3,000 jobs) and November’s number increased by a net 57,000 jobs created. Additionally, the broadest measure of unemployment, U-6, fell against last month to 15.1%; at one point during that number was above 17%. This was also the month that the BLS makes its annual adjustments to underlying jobs data as well as the Household Survey and, while the numbers themselves won’t be adjusted, there was at least some marginally good news in that area as well:

With today’s jobs report, the government issued its annual benchmark update, aligning the data with corporate tax records covering the period from April 2010 to March 2011. The Labor Department added 165,000 to the job count over the period.

The report also included methodology changes to the household survey, incorporating new population data from the decennial census, according to the Labor Department.

It also included changes to the figures used to adjust the data for seasonal swings affecting numbers back to January 2007.

Most of these adjustments, however, are really only of interests to economic statisticians and historians and didn’t really impact the report for January. In fact, there’s very little to nit pick in this report at all. By every measure, this was a very good month all around. Hours worked are up, as is labor force participation. Private sector job growth is booming, and not just in the retail areas. We’re seeing job growth in the manufacturing, construction, and service sectors that, if sustained, could signal the beginning of a very good year for people who have spent the better part of the Obama Administration looking for steady work.

The political implications of this should be rather obvious. If this is a sign of jobs reports to come, then it’s largely good news for the Obama Administration (good news for all incumbents, actually) since it tends to take off the table the GOP’s biggest weapon against the President, the struggling economy. Earlier today before the jobs report came out, Nate Silver posted a detailed historical and statistical analysis suggesting that any jobs growth figure about 150,000 new jobs is good news for the President. Well, this number wasn’t that far from being twice that number — after revisions over the coming months it may well come even closer to being there — so there’s no doubt that they’ll be popping a few champagne corks in the West Wing and at Obama 2012 HQ in Chicago later today.

Of course, there’s still reason to be cautions. The CBO forecast from earlier this week is rather sobering, as are the forecasts for 2012 and onward that we’ve seen from other sources. Europe remains a problem all its own that could push the rest of the world over the brink. The possibility of rising tensions with Iran, with the inevitable increase in oil and gas prices, are a factor whose impact no economic forecaster can anticipate until it actually happens. There are plenty of possibilities that the economy could stumble just as it did in the early spring of 2011. Nonetheless, this is very good news and, hopefully, a sign that we’ve really turned a corner this time.

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About Doug MataconisDoug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway.
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Small Government wet dreams are still holding us back.
Residential construction jobs are up which is good news as construction usually leads us out of rescessions, but has been lagging to date.
The Tea Stain Caucus can still mess us up with another Debt Ceiling debacle…or some other mis-guided ideological cluster-fu**.
And the Eurozone could still wipe out every gain in a blink of an eye.
But yeah…damn good news.

Doug perhaps I wasn’t dreaming about the 3%. At least this report does support my basic contention that the economy is on a slow and steady upward trajectory. A couple days ago they announced the auto market opened strongly in January and is annualising at just over 14 million units which means it’s close to its “natural” level. The point about economic expansions is that once they gain critical mass they do tend to gain momentum. I’m not saying this is going to happen this time but it’s a phenomenon that often occurred previously.

So is he and the whole GOP establishment. Say what you will about Newt’s general election negatives, but he could still fire up the base no matter what the circumstances. Putting Romney at the top of the ticket with an improving economy might actually produce the multi-level electoral blowout they feared from Gingrich.

I don’t know if anyone has read reports of Bernanke’s appearance before house committee yesterday. It was bizarre. He was being castigated by Ryan and other Republicans for taking steps to aid employment. He was his usual polite self but you have to wonder why he doesn’t just pound these little jerks into the sand.

How easy it is for liberals to ignore facts when it suits them. The unemployment rate is down because approximately 1 Million people left the labor force, artificially reducing the unemployment rate. We have anhistorically low participation in the labor force of 63.7% nationally. OTB calls this a good report and all of you liberals are congratulating yourselves that this is a good thing.

Look for more “good news” (read manipulated numbers) as Obama gets closer to election. And I’m sure all of you will cheer these with dutiful enthusiasm, while also dutifully ignoring the reality of how utterly useless Obama’s policies have been.

A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation.

So – more people are out of work than ever, but magically the unemployment rate had dropped. Yes, we do know how that works. But hey – today the market is surging from the labor report and I’ve already made quite a bit of money from it. So all is well, yes? “Official” jobless rate down, market up, who’s to complain?

No one but the very poor, I guess, and no one cares for them – not Romney, not Obama.

“…Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30, according to the Congressional Budget Office. That’s the lowest level since at least 1972. And well below the 25.6% companies paid on average from 1987 to 2008…”

Which is the exact opposite of what the Clown Car has been saying during these primaries.
So if the economy is improving…and we already have record low taxes…and the Goverment is shrinking…what can they campaign on. All they have left is lies.

Zero Hedge, now there’s a well balanced source. The workforce participation numbers are complicated and far from those leaving the participation all being ” poor” the odds are that many of them are not on their uppers.

Scary Muslims
Obama is Neville Chamberlain
Obama is Jimmy Carter
Obama threw Israel under the bus
Obama will take your guns
Obama is a socialist jihadist
Obama is gutting the military
Headless bodies of Americans buried in the desert
Welfare queens driving Cadillacs (presumable to participate in drum circles)
We are losing our freedoms
TSA is a dry run for tyranny
Alinsky!
More scary Muslims

You also might want to look at the comments of Barry Ritholz who isn’t a permabear but a bit of a sceptic. By any measure these were pretty good numbers and more important is the three month trend with it’s upward revisions.

If the economy is getting better, then why did new home sales in the United States hit a brand new all-time record low during 2011?

If the economy is getting better, then why are there 6 million less jobs in America today than there were before the recession started?

If the economy is getting better, then why is the average duration of unemployment in this country close to an all-time record high?

If the economy is getting better, then why has the number of homeless female veterans more than doubled?

If the economy is getting better, then why has the number of Americans on food stamps increased by 3 million since this time last year and by more than 14 million since Barack Obama entered the White House?

If the economy is getting better, then why has the number of children living in poverty in America risen for four years in a row?

If the economy is getting better, then why is the percentage of Americans living in “extreme poverty” at an all-time high?

Thus speaks the classic cognitive dissonance sufferer. The facts don’t fit his world view so it becomes necessary to invent some alternative facts. Having had his first little tranche of facts blown out of the water it becomes necessary to invent a whole new set of facts completely divorced from any context whatever. These conditions exist in large measure because the US has just experienced the worst recession since the thirties. Or weren’t you actually aware of this? When the current president took office the economy was shrinking at annualised rate of 9% and shedding jobs at the rate of 750,000 a month: the entire financial system was on the edge of a precipice; and the US auto industry literally going over the edge. Or weren’t you actually aware of this? The economy is now growing at anualised rate of 2-3% and over the past three months we’ve added about 550,000 jobs. This is relatively an immense improvement on the catastrophic conditions prevailing in Januay 2009. Isn’t a mind even one as cognitively biased as yours capable of absorbing this difference? Probably not.

Because, while things are finally improving, the 2008-2009 crash was really, really bad. Additionally, our government’s policy response has been tepid and confused, due in no small part (but certainly not wholly) to the GOP. That’s why.

Things still kinda suck. That’s certainly true. However, if things continue to improve throught 2012, it’s going to be pretty hard to campaign on “Obama the economy destroyer.” [which is nonsense, given that he took office in the midst of the worst crash we’ve had since the GP]

The Obama Administration’s economic policies have been so-so at best, IMO. The opposition (which can be characterized as “anything the Dems say is wrong”) has been a total clownshow.

“The averages for both periods – 1990-2011 and 1990-2006 (pre-crisis) – were used to adjust the labor force numbers, and the logic is based on an assumption that in a normal economy, even in a recession, the participation rate should stay virtually constant, as observed in the first chart. While the official unemployment rate is 8.5%, the true unemployment rate is magnified considerably to 11.7% when the 1990-2011 average is applied, and a higher rate of 12.1% emerges when the pre-crisis number is plugged in. By extrapolating the results, U6 is closer to 21%.”

Ummm, no. These numbers you use are pre-adjustment. Actual rate for 2011 was less than 2% except for the 4th Quarter (read Holiday temp jobs). In other words, utterly anemic and completely inadequate, particularly since Obama blew 5 Trillion for this pitiful output so far and shows no indications of slowing down.

We were told by these people that the recovery “officially” began in 2009, remember? Keep smoking the good stuff, it obviously helps your interpretation of “facts.”.

In your very first paragraph you cited the participation rate as the primary cause of a statistical aberration in the unemployment rate………..and then failed to note that once again the participation rate fell (to an incredible low, BTW) and is a primary driver of the January number. Why?

The 240 number as an absolute number is admittedly better than awhile, but really the true picture remains abysmal.

Most forecasts have 2012 at 2-3%. Q4 of 11 was 2.8%….Holiday jobs? We’ve just added another 240,000! And I note you can’t refute the demolition of your previous fictions other than with hand waving non sequiturs and suggestions I’m a drug addict.

You haven’t even dented anything much less demolished it. Pointing me to a blog written by some nobody doesn’t prove your point. And forecasts don’t make for facts. There is absolutely nothing of import that has happened over the last quarter which suggests this -questionable -increase will continue. Nothing. No major economic trends which have “surged” or “recovered.”

Besides which, the fact that you would even trumpet a measly 3% growth as some sort of vindication of Obama’s economic policies is rather revealing in and of itself.

Besides which, the fact that you would even trumpet a measly 3% growth as some sort of vindication of Obama’s economic policies is rather revealing in and of itself.

The wingnut mind is a wonderful thing to behold. Totally impervious to context, historical facts or empirical information. Obama didn’t take office 14 months into the worst recession since the thirties; the deficit in Bush’s last calendar year in office wasn’t $1.3 trillion; the economy hadn’t lost 3 million jobs in a year; a -9% GDP shrinkage rate is better than a measly 3% GDP growth rate. It’s inconceivable that in any other area of human life (engineering, book keeping, medicine, marketing groceries) that this kind of total blindness could enable anyone to function effectively. Fascinating.

As you are obviously proud of your economic acumen and ability to interpret the “true” meaning of this report – and you also feel that if I fail to refute statements contained in your citations then you have “destroyed” my position – perhaps you can prove your bona fides by refuting the points in this article, which has quite a radically different take on the numbers?

Bush was a historically bad job creation President. In 2008, we lost 2.6 million jobs under his leadership, and he left the worst economic crisis of our lifetimes for Obama to deal with. We are crawling from the wreckage.

Which do you prefer? The millions of jobs we lost under Bush in ’08, or the 22 straight months of jobs gains we have had under Obama? Please pick one and go on the record.

3 years, 5 TRILLION dollars, Joe. Do you even have any concept how much money that is? Really? And, by the way, Reagan didn’t whine for three years about the Carter disaster he inherited, which was much worse. He didn’t have to – by three years in there was obvious, measurable, significant improvement.

Blaming Bush doesn’t work anymore, buddy. Not even to sway the most ignorant, uninformed citizens. When are you and this President going to grow up and quite blaming everyone else for your abject failures?

Please cite your sources on this because, frankly, your claim is complete nonsense. We have (at least) 2 million less jobs today than when Obama took office. This is a fact. I’m interested in how you warped your mind around the numbers to claim that Obama has added jobs.

I think they clearly underestimated the severity of the crisis back in early ’09, and once it became increasingly clear that they had done so, there didn’t seem to be any course-correction.

Perhaps this had something to do with the fact that GDP shrinkage was 9% and not half that. And what “course correction” was possible.

I’m not a big fan of how the stimulus was sold/defended, which I think ended up constraining policy more.

Sold/defended?… It passed by a couple of votes. How exactly was the president going to “sell” McConnell and the Republicans on signing off on a much bigger number?

Also, while I’m not totally convinced of this, I suspect they could have done a better job regarding mortgage refinancing for “underwater” folks.

Again how were they to get the Republicans to sign off on any major legislation to provide a get out of jail free card for mortgage deliquents without the entire rest of the country not being happy about

I’m unimpressed with Wall St. “reform” and a general lack of holding the culprits of the bubble/crash accountable.

Again Dodd Frank only just squeaked thru and is under attack still. And to charge people with crimes you have to have a case. Unless you’d noticed such cases that have so far been brought have largely resulted in acquittals because they are very hard to prove and people like Goldman partners have the means to hire very good lawyers

*************

With all due respect it’s easy to make vague general assertions where the perfect becomes the enemy of the good without regard to the context of political realities.

3 years, 5 TRILLION dollars, Joe. Do you even have any concept how much money that is? Really? And, by the way, Reagan didn’t whine for three years about the Carter disaster he inherited, which was much worse. He didn’t have to – by three years in there was obvious, measurable, significant improvement.

Now it’s more handwaving about Carter and Reagan. Again totally ignoring the far greater seriousness of this recession and its commonly aknowledged difference from that in the early 80’s (tight money v balance sheet). Not that these distinctions will mean anything to you.

I’m interested in how you warped your mind around the numbers to claim that Obama has added jobs.

I did not say we have a net gain in jobs using the day Obama took office as a baseline. At that point we were hemmoraging jobs – look at the 2.6 million lost the year before Obama took office. Do you understand what a net positive/negative in the monthly job numbers means? Apparently not.

It’s pretty clear you are playing the wingnut game of looking at economic performance under Obama in a vacuum, and pretending the Bush years never happened, and that there is no such thing as cause and effect and economic trends. It makes talking to you a waste of time.

January 2009 – 741,000 jobs lost
February 2009 – 681,000 jobs lost
March 2009 – 652,000 jobs lost
April 2009 – 519,000 jobs lost
May 2009 – 303,000 jobs lost
June 2009 – 463,000 jobs lost
July 2009 – 276,000 jobs lost
August 2009 – 201,000 jobs lost
September 2009 – 263,000 jobs lost
October 2009 – 111,000 jobs lost]
November 2009 – 64,000 jobs created
December 2009 – 109,000 jobs lost
January 2010 – 14,000 jobs created
February 2010 – 39,000 jobs created
March 2010 – 208,000 jobs created
April 2010 – 290,000 jobs created
May 2010 – 413,000 jobs created
June 2010 – 125,000 jobs lost
July 2010 – 131,000 jobs lost (143,000 Federal Census jobs lost)
August 2010 – 54,000 jobs lost
September 2010 – 95,000 jobs lost (According to U.S. Labor Department, 64,000 private sector jobs are added but a net loss of 95,000 jobs are due to government layoffs)

We have (at least) 2 million less jobs today than when Obama took office.

In Gulliver’s fantasy world (appropriate name that) we’re losing 750,000 jobs a month in 2008, Obama take office and by some magical powers he has this is immediately supposed to cease. In fact it continued for six more months and then moved from negative to positive (although modestly). Quite fascinating how this Gulliver is living proof of the strength of the cognitive dissonance theory.

So all those jobs lost for a year after when we’re 14 months into the most serious recession since the30’s by some magical alchemy all become the responsiblity of Obama. So we’re giving the breakdown truck driver the blame for the car he’s come to pull out of the ditch after some drunk put it there. Sure that makes entire sense.

Sure there’s cause and effect, and the next President will have to deal with the completely inaffective way that Obama has dealt with this economic crisis. And I’m sure that all of you will be giving him a three year honeymoon to get it straightened out as well, right? ‘Cause you’re all about analyzing the economy’s performance in context….

@Gulliver: As far as the election goes, comparisons to the beginning of 2009 matter much less than how the economy is doing now. The job growth would look better without the public sector losses these past few years, but those seem to be what the GOP wanted.

Why do you think job losses in early 2009 are due to Obama’s economic policies?

And I’m sure that all of you will be giving him a three year honeymoon to get it straightened out as well, right?

Of course it should have been no problem for him. He should have fixed the problem the day after he entered office. After all what’s the worst recession since the 30’s? You’re a textbook case of the cognitive dissonance condition.

You’re quite fond of this “cognitive dissonance” phrase, aren’t you? just for the sake of variety, could you expand your vocabulary a bit? I’m just asking…

By the way, you intentionally avoid my point, which is that every President prior to Obama has been held responsible for what happens on their watch.. Suddenly, you want Obama to get way with passing the buck on three years of being in charge – two of which his party completely controlled all three branches of government.

So please, Mr. “I’ll kiss Obama’s feet at 3% growth”, at what point are we to expect this 5 Trillion dollars to actually overcome the net loss in private sector jobs under Obama? 5 years? 7 years? Or, perhaps – and more likely – never? The economy is going through a recession-recovery cycle and, just like FDR, Obama’s policies have made the recovery much more painful than it need be. Unfortunately, Obama’s debt will be with us for generations, and will have a lasting burden on the private sector (i.e tax burden to service debt), to say the least .

What’s bogus is all this parsing of participation stats which are complicated and imperfect to start with and subject to the sort of statistical massaging described in that piece by bondad. It’s not much to do with “hooray for our guy”

Unfortunately, Obama’s debt will be with us for generations, and will have a lasting burden on the private sector (i.e tax burden to service debt), to say the least .

And the five trillion created by Bush before he left office that disappears magically in Gulliver’s fantasy land. And of course the vast majority of Obama’s five trillion is the consequence of contractual obligatins from the Bush era. Cognitive dissonance writ large.

@Drew: The 1.2 million number is totally bogus. It’s only true if you assume the population of the US also grew by 1.5 million in the same month, which didn’t actually happen.

@Gulliver: You might want to check up on your numbers as Obama’s policies have added just under $1 trillion to the debt while Bush’s policies added $5 trillion. Also, there’s this thing called a filibuster, so the GOP deserves just as much of the blame on the economy due to their obstruction these past 3 years.

Unfortunately, Obama’s debt will be with us for generations, and will have a lasting burden on the private sector (i.e tax burden to service debt), to say the least .

This is fantastically stupid. Servicing interest payments helps the private sector by adding financial wealth to it. The “debt” is nothing more than the combined savings of the american people; apparently you think they have too much money.

Another question – it the methodology the labor department is currently using to get unemployment numbers the same one it was using say, 10 years ago? If yes, there is a bit of a need to be consistent. It’s the accepted formulation, and the magic unemployment numbers that result, 9%, 8%, 7%, whatever that result are the ones the public, which does not consist of economists and CFO’s by in large, is used to dealing with. If it’s skewed data, it is the skewed data we all know and love, and saying it suddenly does not count as we head into an election is suspect.

Perception becomes reality in a Presidential cycle. If unemployment is going down according to numbers that are derived by accepted methodology and practices, I am less impressed by the argument that is created by throwing in other variables that leave us with results unfavorable to Obama.

If you can show that the books are somehow being cooked in a manner that is new, different, and unique to the Obama administration, let’s hear about it.

Like I said, I respect your opinion when it comes to business and the economy, On the other hand, you can be as rabidly partisan as anyone at OTB, so I am a bit skeptical when you start talking about dispassionate analysis.

Just imagine how much more vibrant the economy would have been if as Republicans proposed we’d massively cut spending, tightened money and let the US auto industry go down the tubes. We’d have been out of this recession two years ago. It terrible the damage Obama has done….if only he’d adopted Republican policies. A tragedy.

No, your statement is fantastically stupid, unless you consider foreign governments a part of our private sector. Forgive me, but get a clue.

@ Drew M

” You might want to check up on your numbers…”

Drew, you do know how baseline budgeting works right? And how the stimulus was permanently added to the new floor for the next budget? This 1 Trillion dollar figure is vapor math. Wwe have irrefutably gone – exclusively during Obama’s administration – from about 10 Trillion to (soon to be ) over 16 Trillion of debt when the next debt ceiling increase takes place. You know why this little thing that’s been popped for the last two years is called a debt ceiling right? ‘Cause, you know, like, each time it happens its, like, a new record high number you know? / sarc

@Gulliver: Most U.S. bonds are owned by americans. Again, you’re being fantastically stupid. Who cares if China gets 2%? Congress won’t let them buy anything with it so the money sits there uselessly in their account at Treasury.

@Gulliver: Pretty sure you were responding to me, and not Drew. I’m not sure how you think the deficits were going to turn out any differently during the last couple years given their starting point. Under Bush, that’s an entirely different story, but you seem to have your IOKIYAR blinkers on.

But the census adjustments actually work against my theory and that of the Obama-detractors. The demographic adjustments had no effect on the unemployment rate, says Mary Bowler, the resident expert in these matters at the BLS. And when it comes to labor force estimates, the steep jump in the number of those not seeking work came entirely from the census adjustment, which added 1.25 million people to that group. If you take out the census adjustment, the labor force numbers stayed essentially the same, as reflected by the labor force participation rate of 63.7%. In other words, the spike in the number of people no longer looking for work is entirely the result of some people at the Labor Department adding numbers to their spread sheets rather than an actual observed shift anywhere in the real economy.

@Gulliver- The debt is a different issue. If you want to talk about it, you should understand its composition. There are a lot of articles on it. Roughly half comes from the drop in revenue from the recession.

@Drew- Yes, the participation rate is important. However, it will accelerate given our demographics due to boomer retirements. I think you have to look at all the numbers with the employment number of 240,000 being a positive no matter what.

The 240,000 jobs is a good number. The 1.2 million who removed themselves from the labor force in January (largest 1 month exodus in history) is bad. That means five times as many gave up looking for work as found it.

Until the labor force participation number goes up, meaning people are bullish on the job market and believe they can find useful employment, the economy won’t make a full recovery.

To try and draw a line under all the fatuous comments from Gulliver and others about the missing 1.25 million here is a piece in the Spectator by Ross Kaminsky who as anyone familiar with him will know loathes Obama and all his works so he may be a more credible source than the several I’ve already provided. He’s pointing out the facts are the facts man. There’s no sleight of hand and the numbers are kosher. Interestingly even though he explains it all there are still boneheads (presumably related to those here) contesting it on his blog causing him to throw up his hands in despair. But there you go there is no cure for terminal stupidity and much of the right is afflicted with it. Finis.

@Neo: Seasonal adjustments aren’t a new development, and are not some grand conspiracy. Calculated Risk has a good explanation of them. Not understanding the seasonal adjustment is a pretty good sign the pundit shouldn’t be taken seriously.